by Bill Tracy
Let me tell you a sad yarn about buying green cars in Virginia.
Due to a dead hybrid battery after 14 years and 192,000 miles, we recently traded in our classic 2006 Toyota Prius for a new Toyota RAV4 Hybrid LE, the cheapest green RAV4.
Had we lived in a different Blue state, we could have purchased the luxurious new RAV4 Prime Plug-In ($40,000 car), with heated seats and all of the fancy extras, cheaper (after taxes) than the $28,000 economy hybrid model, with no heated seats. How is this possible? Well, states like Colorado offer up to $5,000 plug-in vehicle rebate on top of the existing Federal $7,500 tax credit. Furthermore, some states throw in generous additional benefits for plug-ins, such as free HOV/HOT lane use during the gridlocked rush-hour.
Virginia has no plug-in vehicle incentives yet, but per Jim Bacon’s recent article, that is on the agenda. The Old Dominion, however, has a systemic problem in the new car showroom: high property taxes. Just ask former NFL star Michael Vick, who learned the hard way that the Virginia car tax is a progressive tax, especially punishing to newer cars, cleaner cars, and expensive cars.
Let’s take a close look at the green car math. Below I compare NoVA car costs to our neighbors in Washington, D.C. , which offers excise tax-free purchase of all green vehicles over 40 MPG EPA City.
Firstly, let’s assume that I had purchased that fancy new, up-scale, Toyota RAV4 Prime Plug-in:
Plug-in Cost in NoVA: (eg; Alexandria with 5.3% annual car tax before “relief”)
$40,000 Toyota RAV4 Prime Plug-in
$ 8,000 Sales Tax + Annual Car Tax (10-yr estimate)
– $7,500 Federal Subsidy (Tax credit)
– $ 0 Virginia subsidy
$40,500 RAV4 Prime in NoVA
Plug-in Cost in Wash D.C.:
$ 40,000 Toyota RAV4 Prime Plug-in
$ 2,800 D.C. Excise Tax (7% over 3500-lbs)
–$ 7,500 Federal Subsidy (Tax credit)
–$ 2,800 DC subsidy (tax free)
$32,500 RAV4 Prime in D.C.
In reality, we purchased the economic 2020 RAV4 Hybrid (math below). Hybrids (HEV’s) do not plug-in, instead they sip 100% gasoline as their only energy source. It is interesting to note that Washington, D.C., is the only state that still gives a tax credit for hybrids (if they are over 40 MPG EPA City).
Hybrid Cost in NoVA:
$28,000 Toyota RAV4 LE Hybrid
$ 5,000 Sales Tax + Annual Car Tax (10-yr estimate)
– $ 0 Federal Subsidy
– $ 0 Virginia subsidy
$33,000 RAV4 Hybrid in NoVA
Hybrid Cost in Wash, D.C.:
$ 28,000 Toyota RAV4 LE Hybrid
$ 1,960 Excise Tax (7% over 3500-lbs)
–$ 0 Federal Subsidy (Tax credit)
–$ 1,960 DC subsidy (tax free)
$ 28,000 RAV4 Hybrid in DC
Thus, had we lived in D.C., we could have bought the luxury RAV4 Prime plug-in more cheaply than some Virginians can get the non-plug RAV4 base models.
In many blue states, it’s a no-brainer to buy the top-of-the-line RAV4 Prime plug-in version, due to superlative state incentives. Residents of D.C. have a slightly more complex decision though, because D.C. discounts the HEV hybrid too.
Seems to me that Washington, D.C., sets a good example here. If we are truly interested in carbon-reduction (are we?), then fuel-efficient hybrids should be part of that equation. In this regard, honorable mention also goes to Arlington County, which historically offers a reasonable car tax discount for hybrids and plug-ins.
Overall, HEV hybrids face an uphill, if not a losing battle in America. Many blue states and utilities strongly favor Plug-ins over hybrids. Many red states are penalizing HEV hybrid owners with unfair extra taxes, making hybrid ownership financial non-sense in those states.
Virginia has an opportunity to lead on CO2 reduction by embracing hybrid cars as well as plug-ins. But the eco-success of any such Virginia CO2 reduction and incentive strategy probably necessitates car tax reform.
Bill Tracy, a retired engineer, lives in Northern Virginia.
Footnotes/Data Used:
(1) Toyota RAV4 Prime PlugIn- $40,000@40 MPG City/94 MPGe (Weight 4,400-lbs)
(2) Toyota RAV4 LE Hybrid- $28,000@41 MPG City/40 MPG Combined (Weight 3,710-lbs)
(3) Toyota RAV4 LE Standard- $26,000@27 MPG City/30 MPG Combined (Weight 3,370-lbs)
(4) Example NoVA Car Tax: 5.3% with 50% tax relief below $20k car value
(5) Maryland’s plug-in financial incentives, historically similar in magnitude to DC, have apparently expired as of June_2020 (free HOV is allowed).
(6) RAV4 Prime Plug-In features an 18-kwh Lithium battery allowing 42 all-electric miles
Abbreviations:
DMV= DC, Maryland, Virginia
HEV= Hybrid Electric Vehicle – 100% gasoline – Example: Toyota Prius
PHEV= Plug-In Hybrid Electric Vehicle – Gasoline and/or Electric – Example: RAV4 Prime
BEV= Battery Electric Vehicle- 100% electric – Example: Tesla Model 3
